…as the inflationary spiral goes higher and higher, the social security spiral also has the hardest time of all keeping up.The Old Age and Survivors insurance program is supposed to work on the actuarial principle. Workers, and their employers, pay in so much during their working years and when they retire they are supposed to receive so much in ratio.

As inflation robs the dollar of its value, though, that ratio is upset. The dollars they receive in pensions aren' t worth as much as those they paid in in taxes.And when Congress then comes along to help them out by raising benefits and taxes, it discards the old actuarial basis for a new one which will also have to be abandoned as the same progression keeps reoccurring.Under the new scale, workers will see their social security taxes go up next year and again in 1960 and in 1963 and in 1966 and in 1969, until many of them will be paying more for social security than in income taxes. For which they will receive in their old age the higher benefits Congress has voted. But if inflation keeps up, they will be just as badly off as pensioners today unless Congress gives the social security spiral another whirl.

How high is the sky, how deep is the ocean, and how long can even a rich country chase its economic tail that way?

Cross his heart and hope to die, President Johnson is really worried about Inflation. Well may he be. Even Congress is beginning to pay attention.

For progressive inflation could produce a depression worse than that of 1929, and with political consequences a catastrophic as the rise of Hitler during the Great Depression in Germany.

THE CHIEF producer of inflation, in this century, is governmental expenditure, paid for by the issuing of governmental securities — which in effect, amount to the printing of vast sums of new money, even though government bonds do not look like thousand dollar bills. When far too much money is in circulation — whether t h I s money is in the form of corn, of banknotes, or of government at securities — prices rise rapidly, the weak go to the wall, and the whole structure of credit may come crashing down.

Inflation is crudest to people with fixed incomes, who cannot ride the inflationary tide by demanding higher wages and salaries. Most of these people with fixed incomes are elderly.

…“IN MY OLD AGE,” this gentleman writes, “I must worry about the effects of inflalion in reducing the income for my necessities. The purchasing power of my Social Security pension and my professor' s pension are reduced, and so with my bank account and savings deposits ... All too often in America, insufficient income for necessities has caused the death of aged people. Instead of being slowly starved — if it comes to this — I should prefer to have the starving to death done quickly, as among some primitive peoples.”

This commentator adds thatgovernment handouts, through Medicare, the Poverty War, and other schemes, are at best palliatives for the consequences of inflation. And even the most elaborate system of social security cannot suffice to save a people from economic ruin if inflation begins to gallop; for such governmental benefits, too, must be paid in inflated dollars.…

Monetary inflation is the worst enemy of people straited in their means. For as prices go up, and the value of savings goes down, the people hardest hit are the comparatively poor.

Retired persons living on fixed incomes, the aged, unskilled workers, subsistence farmers and the like immediately suffer from swelling prices. Their pensions, interest on savings and limited earnings rise only very slowly—if ever—to meet the new coot of living. These are the bulk of the American “poor,” with those incomes of less than $3,000 that President Johnson laments.

Yet what has the Johnson administration done to help them? Most devices of the grandiose “War on Poverty” have been ineffectual, as yet. But the forces of inflation—unchecked by Johnson, and in some respects actually increased by his policies—are very effectual indeed.

There are two principal causes of inflation:

Excessive governmental spending and increase of wages beyond the general increase of productivity. (The Viet Nam War is only a minor factor in the evaporation of the dollar' s buying power.) President Johnson and his cabinet have not confronted these causes boldly.Grossly unbalanced budgets and vast new fields of governmental expenditure mark the Johnson administration. True, Johnson seems less spendthrift, sometimes, than his own party' s majority in Congress; and he makes small gestures toward economy. But his administrative savings are immensely outweighed by governmental borrowing—with its inflation of the fabric of credit—to finance a vague and somewhat tawdry “Great Society.”…

RUSSELL KIRKDeclare A Truce in War On The PoorHerald-Journal - Google News Archive - May 8, 1965… old folk on modest pensions, or with savings in the bank, or dependent on annuities and other forms of insurance, nowadays often find themselves with only a fraction of the real income on which they calculated in their working and saving years. …

HAD THE DOLLAR been stable, such people would enjoy a modest competence today; but what with inflation, they experience privation or are added to the welfare rolls.

Through deficit spending and bond issuing, the federal government is itself the chief agent in inflation. Also Washington has been timid about resisting other inflationary pressures, particularly from the great labor unions.

Thus some of the present poor have been impoverished by the government itself — which now proposes to extend a helping hand. But very few of the elderly poor will benefit from Washington' s “War on Poverty” projects. The surest form of help to the aged of small means is a stable dollar.

…In ignorance or indifference, rather than through design, for some years our government has been making war upon the poor,... For pity' s sake, we ought to declare a truce.…

Let' s Get RichWhy Shouldn' t We Spend?Ocala Star-Banner - Google News Archive - Jan 19, 1965R HENRY J. TAYLORIf President Johnson is right (and we are safe) in all the spending he' s proposing, what're we waiting for? Why don' t we just double the national debt and everybody get rich?

…Anyone can promise to speed up the printing presses and build up our debt. This brings happiness and security?Governments that overspend face global and epidemical forces from the outside that no amount of mystic theory can avoid or kick downstairs into the Deepfreeze. …

Decreased Value

…The 1939 dollar' s purchasing power has already declined to less than 45 cents.Declining currencies follow the law of physical bodies, they accelerate as the fall. But even at the present rate our dollar will be worth less than 25 cents in 10 years.

A government is a spender not an earner. Anything the government says it will give to the people it must first take from the people. The government is spending more than the entire income of everybody west of the Mississippi River.…

…What is folly in the family debt, debt and more debt cannot be wisdom in the kingdom. The applauded rulers merely come and go and leave us to clean up the mess. So will President Johnson on his present course. His good intentions are not pertinent. Next to wars, nothing has finally caused mankind more misery than Inflation with its destruction of working people' s savings and its artificial pay.…

Inflation is with us already.…MY FAVORITE INDEX to inflation is the candy bar. For the price of sweetmeats is virtually inflexible, yielding only to extreme pressures. A generation ago, the chocolate bar cost a nickel: one still can buy it for a nickel, despite the great increase of the general commodity index.

But slowly the size and quality of the candy bar has diminished, as costs of labor and materials increased. During the past two months, various candy companies further reduced the size of their nickel bars, and began selling somewhat larger bars for a dime; some even have gone up to fifteen cents. When the sweet redoubt of price stability falls to Demon inflation, the dollar is far gone in decay.

Surely, veterans of the Roosevelt Recession, you recall the five - cent hamburger. The same item costs at least a quarter nowadays. Our dollars, friends, buy about one-fifth as much food as they did a generation gone.

If the national administration really meant to help the American poor, it would try to stabilize, or even reduce, commodity prices. …

… thrifty and responsible people who have worked hard all their lives, … must expect to buy less with their dollars.

Taxes will rise, prices will rise — and the Forgotten American (as Barry Goldwater called him once) will tighten his belt. The Great Society may turn out to be the Hollow Dollar Society.

2 Responses to The Social Security Spiral

Well, I'm living on Social Security. There has been no increase in the annual cost of living raise they usually give us because the claim is that the price of gasoline went down in cost. However, gasoline (in fact any energy) is never counted when figuring out any increase! So not only do they lie about the statistics, they lie about why there is no money for old folks but plenty of money for the military contractors.

Now they've got a commission in the works, which will try once again to cut benefits while giving Social Security to Wall Street. It's called "the cat food commission." Perhaps they don't realize that the cost of cat food went up by 40% either.